Yukos awaits tax bailiffs order

Yukos has said there is nothing to prevent bailiffs from seizing cash

Russian oil giant Yukos's future was shrouded in uncertainty on Wednesday after a Moscow court ordered it to pay $3.4bn (£1.9bn) in back taxes.

Yukos has said it faces bankruptcy if forced to pay up the full amount at short notice.

A Yukos spokesman told the BBC the firm is legally entitled to up to three months to pay, but there is no minimum time period to constrain tax officials.

Meanwhile, Yukos has delayed its 2003 financial results, due on 30 June.

On Tuesday, Yukos was found guilty of tax fraud and ordered to pay $3.4bn in back tax for 2000.

Worse to come?

But it remains vulnerable to further tax claims for 2001, 2002 and 2003 for similar amounts.

Analysts believe the final bill could be as high as $10bn unless Yukos is able to reach a settlement with the Tax Ministry, which has shown little interest in negotiating.

Yukos director of international information Hugo Erikssen said Yukos does not yet know how long it has to pay the $3.4bn, or when it will be asked to do so.

"First we have to get a tax bill presented to us, and so far it has not arrived," he told BBC News Online.

Speaking on Wednesday, he said "there is within Russian law a maximum period of three months, and there is no minimum limit".

But, Moscow-based analysts believe the Tax Ministry could seize funds from Yukos's bank accounts within days, something Yukos said after the ruling it was powerless to prevent.

Asset sale fears

Since Yukos has already said its bank accounts contain only about $1bn, an asset auction could follow fast.

"We may see an auction next week," Zarko Stefanovski, senior oil analyst at Aton Capital in Moscow told the BBC. He believes the process of valuing assets for sale would take five days.

The Troika Dialog brokerage has downgraded Yukos's stock because it thinks "yesterday's decision increases the likelihood of a fire sale of assets".

That raises two questions: what might be sold and who would control the process - Yukos or tax officials?

Yukos - which has insisted all along that it has done no wrong - has roughly $20bn in frozen assets, which the firm's lawyers consider the court has a legal duty to unfreeze so Yukos can find a way to meet the payment.

Tough options

Yukos holds a 35% stake in another Russian oil firm, Sibneft; their merger pact unravelled when Yukos's assets were frozen following the arrest last autumn of its then-CEO Mikhail Khordokovsky.

Mr Stefanovski said the sale of the Sibneft stake, worth about $4.8bn, would be the "most logical" step, possibly back to Sibneft itself, or to a foreign oil firm.

Mr Khordokovsky's holding company Menatep, which owns 60% of Yukos, could also offer to sell shares. This would weaken Mr Khordokovsky, which many see as the Kremlin's goal.

The World Bank's Russia economist urged Russia's government on Wednesday to avoid the temptation to renationalise firms, like Yukos, built by the new rich through acquiring state assets at knock down prices.

"Nothing gives an argument for renationalisation," said Christof Ruehl. "Government-owned enterprises are worse performing and more incompetent than private enterprises, whoever owns them."

Speculation has focused on other Yukos assets too, including the Angarsk refinery; gas fields in northern Siberia; the Unrengol oil field in west Siberia; and Manoil and the East Siberian Oil and Gas Co.

Waiting to appeal

Yukos proposed a solution to the Tax Ministry in June which envisaged it issuing new shares to raise the money.

BBC News Online understands that approaches to the Tax Ministry have met with little interest, before and after the court ruling.

"There has been no confirmation of talks taking place between the Tax Ministry and Yukos, and that is the most worrying sign," said Mr Stefanovski.

Yukos has insisted all along that it is innocent of the charges, which many Russians see as trumped up to curb Mr Khordokovsky's support for opposition groups. His trial on separate fraud charges has been adjourned.

Yukos is waiting for documents from the court in order to lodge an appeal. "We need to have the motivating part of the court ruling - not just the ruling but the argument," said Mr Erikssen, adding these "would normally take a few days".

Russia's president Vladimir Putin has given assurances that he does not want to see Yukos collapse.

Yukos chief financial officer Bruce Misamore said the firm would delay the release of its full year 2003 accounts.

"We still need to know how the court decision will affect our accounts," Dow Jones newswire quoted him as saying.